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• Banking and Financial Legalese (Terms)
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WHAT ARE THE DIFFERENCES BETWEEN A BANK AND A FINANCE COMPANY ?

The main difference between a bank and a finance company is that a finance company is not allowed to

• accept money on deposit which is repayable on demand by cheques, drafts, orders or any other instrument drawn by the depositor on the institution or
• deal in foreign currency.

Nevertheless, a finance company can receive deposits on deposit account and savings account.

In fact, a finance company main business is more towards giving credit facilities.

WHAT ARE THE FINANCIAL REQUIREMENTS AND DUTIES OF BANKING AND FINANCIAL INSTITUTION IN MALAYSIA ?

Every licensed bank or financial institution is required by the Central Bank of Malaysia to maintain

• reserve fund
• capital fund
• liquid assets
• assets in Malaysia.

Under Section 40 of the Banking and Financial Institutions Act 1989, every bank and financial institution must appoint each year before a date specified by the Central Bank of Malaysia, an auditor approved the Minister of Finance on the recommendation of Central Bank of Malaysia.

The duties of an auditor appointed shall be

• to carry out, in case of local bank or financial institution, an audit of the accounts of the institution
• to carry out, in case of foreign bank, an audit of the account of that bank in respect of its operation in Malaysia and
• to submit a report of such audit to the members of the licensed institution

Within 3 months after the close of each financial year of a bank or financial institution, every such institution shall submit to the Central Bank of Malaysia, 2 copies of the following documents

• its latest audited annual balance sheet, profit and loss account and statement setting out the sources of its funds, the purposes for which, and the manner in which, such funds have been utilized and
• the report of
• the auditor and
• in the case of a bank or financial institution, the directors under Section 169(5) of the Companies Act 1965.

Every bank and financial institution shall within 14 days of the laying of its accounts at its annual general meeting

• publish in not less than 2 daily local newspapers approved by the Central Bank of Malaysia, one which shall be in Malay language and the other in English and
• exhibit thereafter throughout the year in conspicuous position at every office in Malaysia of the institution, a copy each of its balance sheet.

Apart from the above requirements, every bank and financial institution shall submit to the Central Bank of Malaysia

• a statement showing the assets and liabilities of the institution at its principal place of business and at each other office of the institution in Malaysia respectively and
• such further information, documents, statistics or returns as the Central Bank of Malaysia may specify.